Respite for Investors as Stock Market Recovers N150bn


By Goddy Egene

Investors in equities heaved a heavy sigh of relief last week as the market posted significant recovery and ended with improved turnover.

The stock market had suffered a decline of 3.51 per cent the previous week due to the impact of the economic lockdown following the COVID-19 pandemic.

However, bargain hunting by discerning investors saw the market recover N150 billion last week.

Specifically, the Nigerian Stock Exchange (NSE) All-Share Index rose 1.37 per cent, while market capitalisation appreciated to N11.144 trillion, from N10.994 trillion.

All other indices finished higher with the exception of NSE Oil/Gas, NSE Lotus II and NSE Industrial Goods which depreciated by 4.76 per cent, 2.65 per cent and 6.59 per cent while NSE ASeM Index closed flat.

An analysis of the sectoral performance showed that the NSE Banking Index led with a jump of 12.4 per cent, trailed by the NSE Consumer Goods Index that appreciated by 6.5 per cent. The NSE Insurance Index chalked up 0.2 per cent.

Conversely, the NSE Industrial Goods Index recorded the highest decline of 6.6 per cent, trailed by the NSE Oil & Gas Index with a fall of 4.8 per cent.

However, the volume and value of shares traded rose significantly as investors exchanged 2.440 billion shares worth N19.932 billion in 18,918 deals last week in contrast to a total of 1.534 billion shares valued at N11.267 billion that exchanged hands last week in 18,928 deals the previous week. The high turnover was recorded despite the fact that trading was only four days last week following the declaration of Friday as public holiday by the federal government.

Some market analysts said despite closing positively last week, risks still persists in the market, due to the challenges in the macro-economy.

“Despite the market closing positive risks remain on the horizon, given the rising cases of COVID-19 in Nigeria. More so, our base case is for the FGN to extend the presently instituted lockdown in Lagos, Abuja, and Ogun, by another one week. Thus, we advise investors to trade cautiously, taking positions in fundamentally justified stocks,” analysts at Cordros Securities Limited said.

Market turnover

Meanwhile, a look at the activity chart showed that the Financial Services industry remained the most traded, accounting for 2.182 billion shares valued at N11.107 billion traded in 11,322 deals.

With the performance, the sector contributed 89.42 per cent and 55.72 per cent to the total equity turnover volume and value respectively. The Industrial Goods followed with 102.769 million shares worth N3.633 billion in 2,483 deals. The third place was the Consumer Goods industry, with a turnover of 51.075 million shares worth N3.578 billion in 1,924 deals.

Trading in the top three Equities namely, Omoluabi Mortgage Bank Plc, Guaranty Trust Bank Plc and FBN Holdings Plc, accounted for 1.702 billion shares worth N8.033 billion in 4,443 deals.

Investors continued to react positively to the results of FBN Holdings for the year ended December 31, 2019, showing higher bottom-line and a dividend payment.
For instance, FBN Holdings Plc posted gross earnings of N627 billion in 2019, showing an increase of 6.7 per cent compared with N587.4 billion in 2018.Net interest income moved from N285.3 billion to N290.2 billion, while non-interest income rose from N132 billion to N159.2 billion. Impairment charges fell 41.5 per cent to N51.1 billion from N87.5 billion, while operating expenses rose 18.3 per cent to N314.7 billion from N266 billion. As result, profit before tax (PBT) grew by 30.9 per cent to N83.6 billion in 2019, from N63.9 billion in 2018, while profit after tax (PAT) rose 26.5 per cent to N73.7 billion compared with N58.2 billion. Earnings per share grew from 161 kobo to 195 kobo, out which the board recommended that 38 kobo be paid as dividend to the shareholders.

Top price gainers and losers

The price movement chart displayed 35 price gainers higher than 15 equities in the previous week, while 18 equities depreciated in price, lower than 36 in the previous week.

It was a very bullish week for investors in Lafarge Africa Plc as the stock soared by 41.3 per cent as the company bounced profitability and resumed dividend payment after years of losses.

The cement manufacturing firm recorded a profit after tax of N15.5 billion in 2019, up from a loss of N8.1 billion in 2018. Details of the audited results showed that it recorded a revenue of N213 billion in 2019, as against N218 billion in 2018.Operating expenses were reduced from N29.89 billion to N23.42 billion. The company ended the year with a profit after tax of N15.5 billion compared with a loss of N8.1 billion in 2018.

Based on the positive performance, the board has recommended a dividend of 100 kobo per share.

The Managing Director/Chief Executive Officer of Lafarge Africa Plc, Mr. Khaled El Dokani, said: “Our turnaround and cost-reduction strategy in 2019 and the divestment of the South African business, have delivered strong results. The decrease in net debt has significantly strengthened our balance sheet and has placed us in a vantage position to face the future.”

Dokani said though the COVID-19 pandemic is now impacting Nigeria, Lafarge Africa had taken the necessary measures to protect the health of its employees, customers, suppliers and other stakeholders.

“The construction sector and construction sites are generally more resilient than other sectors and Lafarge Africa has a strengthened balance sheet and is well equipped to weather the storm. However, we are closely monitoring the evolving situation and the impact of the COVID-19 pandemic on the Nigerian market,” he noted.

Apart from the Lafarge Africa that led the price gainers for the week, Wema Bank Plc followed with 25.5 per cent. United Bank for Africa Plc and Sterling Bank Plc chalked up 25.2 per cent apiece, just as Fidelity Bank Plc garnered 24.2 per cent.

Dangote Sugar Refinery Plc and added 20.2 per cent, while Ecobank Transnational Incorporated went up by 19.2 per cent. FBN Holdings Plc, Zenith Bank Plc and FCMB Group Plc chalked up 18.9 per cent, 17.6 per cent and 16.3 per cent in that order.

On the contrary, Ardova Plc led the price losers with 18.4 per cent, trailed by Skyway Aviation Handling Company Plc with a decline of 15.6 per cent. BUA Cement Plc shed 12.7 per cent.

Learn Africa Plc and Cutix Plc went down by 10 per cent, just as B.O.C Gases Plc declined by 9.8 per cent. AXA Mansard Insurnace Plc dipped by 9.7 per cent. UACN Property Development Company Plc went lost 9.4 per cent, while Seplat and Courtville Business Solutions Plc fell 9.0 per cent each.